The Morning Call
9/11/23
The
Market
Technical
Last week, the S&P
reversed itself and pushed below its 50 DMA resetting it to resistance. However, it remains well above its 100 and
200 DMAs and within a short-term uptrend.
Until it successfully challenges these longer-term support levels, the assumption
is that the bias is to the upside. That
said, uncertainty regarding a whole host of economic/political issues is
elevated. So, I am not sure how much
room to rally there is.
Squeeze potential.
https://www.zerohedge.com/the-market-ear/3-charts-we-are-watching-squeeze-potential-really
Hedge fund short position.
https://www.zerohedge.com/the-market-ear/chart-keeps-bears-awake-night
TLT had another
down week, and its chart remains the ugliest of the group on a long-term basis.
It did manage to close that big gap up open which should remove some short-term
downward pressure. I pointed out last
week that the long Treasury is near a twenty-year low. As a contrary opinionist, that holds some
appeal to me, which, if you remember, I acted on a couple of weeks ago, buying
a small position.
GLD also had a
rough week, in the process resetting its 50 DMA to resistance. As you can see, it looks like it is about to
challenge its 200 DMA. If successful, (1)
that would put it below all three DMAs, (2) there isn’t much support between the
200 DMA and the lower boundary of its long-term uptrend and (3) it could be
potentially signaling a major trend reversal.
The dollar rallied after the so-so preceding week,
continuing a two-month sizz to the upside.
But, as you can see, it is approaching the upper boundary of its short-term
uptrend which should slow its rate of advance.
Let’s see how it handles that resistance. I remind you that usually a strong dollar is
not a plus for stocks.
Friday in the
charts.
Fundamental
Headlines
The
Economy
Last Week Review
Not
much US data last week. What there was,
was negative; although there was one primary indicator that registered neutral. This keeps the lack of a trend in place. We need follow through to establish a trend and
dispel the current uncertainty overhanging the economy/Market. Unfortunately, we simply don’t have that
right now. In short, the issues of whether
or not (1) inflation is in the rear-view mirror and (2) we will get a ‘soft’
landing are not settled.
One
thing that is clear is that the rest of the world is not doing all that
well. Europe is almost surely in a
recession, Japan appears to the heading that way and China, while growing, is
doing so well below historical standards.
Maybe the US can muddle through this period of weakening global economic
activity; but I wouldn’t put any big bucks on the odds.
But
is the worst over?
https://www.riskhedge.com/outplacement/im-tempering-that-pessimist-on-my-shoulder/rcm
So,
I am sticking with my recession forecast.
My conviction remains weak but getting stronger. Though if we have one I have no idea of its
magnitude.
What
recession?
Update
of weekly leading econoimic index.
I
am also maintaining my position that the Fed loosens at the first sign of
trouble. Although here too, my level of
certainty is quite low. In short, I am
just as confused as everyone else.
Obfuscating
the truth about inflation.
In this kind of environment, the probabilities of a mistake in monetary
and/or fiscal policy rises and with it the odds of the one scenario that would
screw almost all investors/forecasters/current elected officials, i.e., either the
Fed sticks to its guns (made necessary by a lack of improvement in the
inflation stats), pushing the economy into a rough recession or the economy
falls into a severe recession of its own accord weighted down by years of
monetary/fiscal mismanagement.
Longer term, irrespective of how low inflation goes in the short term,
irrespective of whether or not we have a recession and if so, how deep it will
be, we are still faced with an economy growing at well below its historic
secular rate and a base rate of inflation above 2%.
Correcting those self-inflicted wounds won’t be easy. It will take years
of fiscal and monetary restraint to do so. And that would mean less fiscal
stimulus and interest rates staying higher for longer than many now expect---which
unfortunately is not apt to happen.
The
Economy
US
International
August YoY Chinese
vehicle sales were up 8.4% versus estimates of +2.0%.
August YoY
Japanese machine tool orders fell 17.6% versus forecasts of -17.0%.
Other
Recession
The slide in consumer credit accelerates.
The Financial System
FDIC still sees risk in the banking system.
Civil Strife
Thoughts on the 2024 election.
https://www.zerohedge.com/political/doug-casey-2024-election
Geopolitics
NATO chief admits Russian invaded Ukraine to
prevent NATO expansion. (Remember Bush the elder and Jim Baker promised Gorbachev
NATO would not expand eastward if Gorbachev dismantled the Soviet Union.)
China
China taking refining market share.
Bulls**t Story (s) of the day
How many times can this woman be wrong?
I wonder how much these guys get paid for stating
the obvious.
https://www.bloomberg.com/news/articles/2023-09-08/g-20-sees-challenge-to-long-term-growth-from-cascading-crises?srnd=premium&sref=loFkkPMQ
Bottom line
How overvalued in the NASDAQ?
https://www.zerohedge.com/markets/we-are-seeing-minsky-moment-grossly-overvalued-nasdaq
News on Stocks in Our Portfolios
What
I am reading today
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